Weekly Stock Market Overview(April 17, 2020)

It was a second consecutive positive week for the S&P 500 (^GSPC). During the week, the ^GSPC gained 84.74 points, or 3.04%, and closed at 2874.56 on Friday, April 17, 2020. ^GSPC was trading at an average weekly trading volume.

S&P 500 Trend Analysis:

The S&P 500 weekly uptrend had started on March 23, 2020 at 2,191.86 and reached 2,879.22 on April 17, 2020, making a 31.36% gain in eighteen business days.

Weekly uptrend has formed a Rising Wedge chart pattern. The Rising Wedge in downtrend is considered as a continuation pattern, and it indicates that the monthly downtrend is not over yet. It is usually followed by the next downtrend sub-wave.

C wave might be tricky. According to Elliott Wave theory the advancing C wave within upward correction in larger bear markets are just as dynamic and can be mistaken for the start of a new upswing. If C wave advance above 2792.69 50% Fibonacci retracement level, the 50 Day Moving Average will be the next resistance level (currently 2909.56). At this point, it would be a good idea to reduce the risk and use some stop losses techniques... Considering the high risk of the trend reversal, we recommend to use the Parabolic SAR technique to identify the exit points.

The latest Parabolic SAR buy signal was generated on March 24th when S&P 500 closed at 2447.33 above Parabolic SAR (2189.668). The current Parabolic SAR value is 2763.89 that is already 11.45% higher than the March 24th buy price.

^GSPC: S&P 500

The ^GSPC price is now near the 50 Day Moving Average support level. The weekly volatility was 193% above average. The daily Lane's Stochastic and Williams' Percentage Range (W%R) are strongly overbought. Daily Moving Average Convergence Divergence (MACD) has bearish divergence.

^GSPC: S&P 500

More than 34% of S&P 500 component stocks have the daily Williams' Percentage Range (W%R) strongly overbought. It is the highest level since January 18, 2019. Almost 16% of S&P 500 component stocks have daily MACD bearish divergence. It is the highest level since February 22, 2019 - the beginning of the downtrend wave. Taking into consideration the above trend analysis and bearish technical indicators, there is a high probability that the weekly uptrend might be over soon.

S&P 500 Sector Rotation

The Health Care sector was the strongest sector last week (6.27%), followed by the Consumer Discretionary sector (5.86%). The Financial sector was the worst performing sector of the week (-4.23%), followed by the Materials sector (-2.26%).

The Health Care sector is the most overvalued sector, followed by Consumer Staples, while Hypermarkets & Super Centers, Biotechnology, and Managed Health Care are among the most overvalued industries. The Energy sector is the most oversold sector, followed by Financials, while Oil & Gas Drilling, Oil & Gas Equipment & Services, and Diversified Banks are among the most oversold industries.

During the past week, Dow Jones Industrial Average sank 507.65 points or 2.87%, to 17164.95. Williams' Percentage Range and Lane's Stochastic are overbought in a monthly time frame. The Dow Jones price is near 200 Day Moving Average.